DePIN – Killer use case or solution looking for a problem?

DePIN – Killer use case or solution looking for a problem? July 8, 2025 DOWNLOAD PDF REPORT Is DePIN really the “killer use-case” the crypto world’s been waiting for – or just another solution in search of a problem? That’s the question Vikara co-founder Mark Riccio tackles in our new July 2025 report, “DePIN: Killer Use Case or Solution Looking for a Problem?” The paper breaks down ten of the most talked-about Decentralised Physical Infrastructure Network (DePIN) projects – from Helium and Render to relative newcomers like Grass and Silencio – and scores each on three simple lenses: Business model – how (and whether) the network actually makes money. Real-world adoption – who’s using it, and at what scale. Tokenomics – the incentives, burn mechanics and supply dynamics that can make or break long-term value. What did we find? In short, user-funded networks are growing, but mainstream demand remains patchy; burn-and-mint reward structures dominate; builders are flocking to Solana for speed and cost; and despite the hype, DePIN tokens have been among the worst price performers this cycle – which may spell opportunity for selective investors. Curious to see which projects are quietly gaining traction, which ones are burning cash (and tokens) without users, and where the next wave of real-world infrastructure disruption might emerge? Download the report here. Mark Riccio, CFA Vikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact us if you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First to KnowKeep up to date with industry news and events   ©

Stablecoins – The Trillion Dollar Opportunity

Stablecoins – The Trillion Dollar Opportunity June 10, 2025 DOWNLOAD PDF REPORT Stablecoins are front page news. From the US Congress progressing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act of 2025, the first comprehensive federal framework for regulating stablecoins in the US, to stablecoin issuer Circle launching a $6.8bn IPO on the NYSE on June 4, attention is being brought to THE crypto use case. Figure 1 – Circle surged 169% on its first trading day Source: Coindesk. The total stablecoin market capitalization has exploded over the past few years, reaching $250bn in early May 2025, with USD Tether (USDT) comprising nearly 62% of the total value (Chart 1). This is up from $25bn at the end of 2020. Chart 1 – Stablecoin Market Capitalization Source: DefiLlama. Stablecoin use cases are diverse, ranging from international payments to liquidity management to protection against currency fluctuations. These can be a large, international commodities broker using stablecoins for instant payment on delivery of an iron ore shipment, to a contract worker in Pakistan being paid for consulting work onchain in USDs, for example. What are Stablecoins? Stablecoins are a type of cryptocurrency or token whose value is pegged, or tied, to that of another asset. There are four primary types of stablecoins today, categorized by their collateral backing: fiat (USD or Euro), crypto (Bitcoin or Ethereum), commodity (gold) and algorithmic (math) stablecoins. The five largest stablecoins are in the table below, with USDT and US Dollar Circle (Circle or USDC) comprising the significant majority, with all five backed by US dollar assets. Figure 2 – Top five stablecoins by market capitalization Source: DefiLlama. We will use Tether or USDT as the example given it is the largest and most high profile stablecoin. Founded in 2014 as “Realcoin,” it was rebranded Tether to reflect its mission of tethering digital assets to fiat currencies. As the name suggests, the primary objective of a stablecoin is to maintain a 1:1 value (peg to 1) to the underlying asset, with any deviation is called “depegging.” Think Terra Luna. More on that later. We note that stablecoins are onchain, meaning their existence, transactions and data are recorded, verified and stored on a blockchain. In the case of USDT, while it is on nearly different 100 blockchains, 90% of USDT is on just two blockchains, Tron ($77bn) and Ethereum ($63bn). Overall, Ethereum has just under 50% share of all stablecoins (Figure 3). Figure 3 – Top five Ethereum stablecoins by value Source: DefiLlama. Benefits of Stablecoins Stablecoins provide numerous advantages over the traditional banking system, especially for individuals that reside in countries with volatile currencies or inflation or those that are under/unbanked. These are outlined in Figure 4 below. Figure 4 – Benefit of stablecoins Source: Vikara Capital How do Stablecoins Work? How does the process of creating a new or “minting” a stablecoin work? As outlined in the diagram below, a KYC approved individual or institution that wants USDT deposits fiat to Tether’s banking partner. Once the fiat is confirmed, the USDT is minted by Tether Operations Limited, with the equivalent amount of tokenized fiat less fees sent to the customer’s digital wallet for immediate use. Figure 5 – Minting Tether: USD to USDT process Source: Tether.to; Vikara Capital. If the customer wants to redeem the USDT, they deposit the USDT into their account with Tether. Once verified, Tether swaps the tokens for fiat and removes the USDT from circulation. Note there are other ways to acquire USDT, such as using fiat to buy a token like Ethereum or Solana directly via various applications, then swapping those tokens for stables, for example. Fiat-backed Stablecoin Collateral Regarding collateral, Tether states that “every Tether token is 100% backed by reserves, which includes traditional currency, cash equivalents, and other assets, including receivables from loans made by Tether to third parties.” Therefore, when creating new USDT, Tether invests the fiat in assets listed in Figure 6 below. There is a long-standing skepticism of Tether’s claim that USDT is fully backed by liquid reserves. That claim largely stems from Tether’s refusal to complete an audit, with management continuing to make statements that they are “engaging with a Big Four accounting firm” to audit the stablecoin issuers financials. To date, they have engaged BDO to complete quarterly attestations of Tether’s reserves versus an audit, meaning the review is likely less comprehensive than a full audit. That said, as of 31 March 2025,  Tether’s financials showed a net equity position of $5.6bn with assets totaling $149.3bn (Figure 6). Figure 6 – BDO’s Q1 2025 Tether Reserve Attestation Source: Tether.to; as of 31 March 2025. Note that $98.5bn is in US T-bills and another $15.1bn in overnight repos. Tether is now the 19th largest holder of treasuries globally and was the seventh largest purchaser of US treasuries in 2024 (Chart 2). Chart 2 – Tether was the seventh largest buyer of US Treasuries in 2024 Source: x.com @paoloardoino. Stablecoin Use Cases We briefly mentioned general use cases above, but stablecoin usage is still driven primarily by crypto, either as a crypto trading pair, including decentralized finance (DeFi) applications or on/off-ramp activities. These collectively totaled $24trn or 92% of total transaction value in 2024. Figure 7 – Stablecoin Use Case by Transaction Value (2024) Source: BCG: Stablecoins – Five killer tests to gauge their potential. This is further exemplified as onchain USDT transfers reached $1trn in May 2025, demonstrating Tether’s critical role as the most widely used asset in the crypto market, underpinning the majority of crypto spot and derivative volumes. Chart 3 – Monthly onchain USDT transfer volume reached an all-time high >$1trn in May Source: Token Terminal. We summarize several crypto specific use cases below: Trading/investing: USDT acts as a pair against most traded tokens, allowing users to buy, sell or hold assets without worrying about fiat currency conversion. Flight to safety: USDT can act as a safehaven during market volatility and/or as investors move in and out of stables

The Donald Is Back

The Donald Is Back November 20, 2024 DOWNLOAD PDF REPORT Donald J. Trump has been elected the 47th president of the United States. The majority of the American people have spoken and the digital asset markets approve. Interesting tidbit. Trump is only the second US president to be elected to non-consecutive terms. The other being Democrat Grover Cleveland, 22nd and 24th US president, serving from 1885 to 1889 and from 1893 to 1897. President Cleveland’s focus on political reform and fiscal conservatism and a commitment to the principles of classical liberalism made him an icon for American conservatives even though he was a Democrat. Further, his crusade against political corruption, patronage, and bossism convinced many Republicans to cross party lines and support him during his first campaign for president. MAG(A) of the late 1800s? Trump Pump The week prior to the election, as uncertainty peaked, crypto markets sold off, with Bitcoin bottoming the day before the election at $68,600. Fast forward two weeks later and Bitcoin is over $90,000, having reached a high of $93,900. Chart 1 – Bitcoin Price Performance (YTD 2024) Source: Tradingview Why the Excitement? As highlighted in our September note “Trump vs. Harris: Who’s Better for Crypto?” we commented: “Donald Trump has been much more consistent while also making multiple policy statements that support the crypto industry. Ranging from the creation of a Bitcoin strategic reserve to self-custody to the creation of a presidential advisory council focused on Bitcoin and cryptocurrency regulation, all are very positive for the industry hence his election would likely be a catalyst for cryptocurrency industry growth and token prices.” Now that he is the President-elect, that view proved to be correct, with shape taking to what the next four years will look like and ensuring the right bodies are in the right seats to push the industry forward. Recall Trump has made numerous supportive policy statements including: Creation of BTC strategic reserve Establish a presidential advisory council focused on Bitcoin and cryptocurrency regulation Support the right to self-custody Nominate a crypto-friendly SEC chair Block the Federal Reserve from creating its own central bank digital currency (CBDC) He also recently added the potential to make certain cryptocurrency gains tax free (woohoo!). Beyond Trump’s statements supporting crypto, his cabinet and advisors are comprised of crypto advocates. This includes: JD Vance – VP, previously disclosed a sizable Bitcoin holding, has long held a positive stance on crypto, shaped likely by his time working with Peter Theil. Vivek Ramaswamy – appointed as co-head of the Department of Government Efficiency (DOGE), has long been pro-crypto and stated during the Republican Party primary debates that “my view is that most forms of cryptocurrency should be in the category of commodities, not securities”, a positive for the space. Elon Musk – the first buddy, who is heading up DOGE with Vivek, has accepted crypto payments at his various companies, has held BTC on balance sheet and has been a regular promoter of Dogecoin. RFK Jr – appointed head of Health and Human Services (HHS) and has long been pro-BTC, calling it the “currency of freedom”. Note he was first to propose a BTC strategic reserve during his presidential run. He also claims to hold 70% of his wealth in BTC. Howard Lutnick – appointed Commerce Secretary, Cantor Fitzgerald CEO has been a long-time advocate of BTC and Tether (USDT). Since 2021, Cantor has helped Tether manage their significant holdings of US Treasuries that back its USDT stablecoin. Cantor also recently launched a $2bn BTC financing business with the goal of providing leverage to BTC investors. There are other pro-crypto professionals vying for cabinet and/or head of agency positions. Frontrunners include: Scott Bessent (Treasury Secretary) – the founder of hedge fund Key Square Group has long supported BTC, saying it’s a way for young people, many who have been locked out of markets, to participate in capitalism while also stating “crypto is about freedom” and “crypto is here to stay”. Brian Brooks & Dan Gallagher (SEC Chair) – two leading SEC Chair candidates include Brooks, former CEO of Binance USA and board member of HBAR and Gallagher, Robinhood’s chief legal officer. Both are openly pro-crypto and both have worked in industry. It was also widely reported that on November 18, Trump met with CEO of Coinbase Brian Armstrong, where they discussed personnel appointments for his second administration along with what a BTC strategic reserve would look like (the US government has historically used Coinbase to custody and sell BTC). This is a great start to creating a pro-crypto administration who can work to provide regulatory clarity, especially as crypto has become a bipartisan issue. Please Regulate Us Rarely would we take the view that the US needs more regulation, but in the case of crypto, we would welcome a sensible regulatory framework that achieves the goals of weeding out bad actors, facilitating the on and offboarding of capital, while providing clarity and comfort to capital allocators looking to support a nascent industry. On the latter point, as we’ve noted many times, few large asset managers (think state pension funds or university endowments) will allocate in size until there is regulation in place. This is evidenced by assets managers / hedge funds using the BTC ETF or using publicly traded equities such as MicroStrategy or BTC miners to gain exposure to digital assets. While it’s hard to forecast what the regulatory framework will look like, putting the right bodies in the right seats is essential to avoid a Gary Gensler 2.0. Under his SEC leadership, regulation by enforcement became the norm. He presided over Operation Chokepoint 2.0, whose primary goal was to limit or stop access to the cryptocurrency market, at least in the US. Good news is that Gary Gensler’s reign of terror is over. It is rumored that he will submit his resignation in late November / early December and be out of office before Trump’s inauguration on January 20. Figure 1 – SEC Chair Gary Genslar Tried and

The Importance of Decentralization – 5. Financial Inclusion

The Importance of Decentralization – 5. Financial Inclusion A series by Vikara. October 18, 2024 Financial Inclusion Through Decentralization Financial Inclusion Through Decentralization Access to financial services is a fundamental enabler of economic growth and personal development. Yet, traditional financial systems have left a significant portion of the global population underserved or excluded. Factors such as geographical limitations, lack of infrastructure, stringent regulatory requirements, and high fees have prevented billions of people from accessing essential financial services like banking, lending, and insurance. Decentralization offers a transformative solution to this problem by providing open, permissionless financial networks that are accessible to anyone with an internet connection. Decentralized finance (DeFi) platforms eliminate the need for traditional intermediaries, reducing costs, simplifying access, and empowering individuals to take control of their financial futures. This chapter explores how decentralization drives financial inclusion, using real-world examples to illustrate its impact. The Exclusionary Nature of Centralized Finance Centralized financial systems are often characterized by barriers that restrict access for many individuals and communities: Geographical Barriers: In many regions, especially in developing countries, traditional banking infrastructure is limited or non-existent. People living in remote areas may have to travel long distances to reach a bank, if one exists at all. Strict Regulatory Requirements: Centralized financial institutions often impose strict requirements for opening accounts, obtaining loans, or accessing other services. These requirements, such as proof of identity, credit history, and minimum income levels, can exclude those who lack formal documentation or a steady income. High Fees and Costs: Traditional banking and financial services can be costly, with high fees for transactions, account maintenance, and international transfers. These costs can make financial services inaccessible or impractical for low-income individuals. A stark example of financial exclusion is the global remittance market. Migrant workers often face high fees and long processing times when sending money to their families in other countries through traditional remittance services. These barriers can significantly reduce the amount of money that reaches the intended recipients, impacting the well-being of families who rely on these funds. Decentralization: Enabling Financial Inclusion Decentralized systems address these barriers by providing open, permissionless access to financial services. Here’s how decentralization drives financial inclusion: Borderless Access to Financial Services:  Decentralized finance (DeFi) platforms are accessible to anyone with an internet connection, regardless of geographical location. They operate on blockchain networks that are open to participants globally, eliminating the need for physical infrastructure and reducing the barriers to entry. Example: The DeFi platform Celo is designed to provide financial services to underserved communities, particularly in developing countries. Its mobile-first approach enables users to access financial services such as savings, loans, and payments directly from their smartphones, bypassing the need for traditional banking infrastructure. By leveraging blockchain technology, Celo provides secure, low-cost financial services to individuals who have been excluded from the traditional financial system. Reduced Fees and Transaction Costs:  Decentralized networks eliminate intermediaries, reducing the costs associated with financial transactions. This reduction in fees makes it more affordable for individuals to access services like remittances, lending, and asset transfers. Example: Stellar is a decentralized protocol that facilitates low-cost, fast cross-border transactions. It allows users to send money across borders with minimal fees, making it an attractive option for remittances. Stellar’s open network enables peer-to-peer transactions without the need for intermediaries, reducing the costs and delays commonly associated with traditional remittance services. Permissionless Lending and Borrowing:  DeFi platforms offer permissionless lending and borrowing services, allowing individuals to access credit without the need for credit checks, collateral requirements, or approval from a central authority. Smart contracts automate these processes, ensuring transparency and reducing the risk of bias or discrimination. Example: Aave is a decentralized lending platform that enables users to borrow and lend cryptocurrencies without the need for traditional financial intermediaries. Users can deposit assets into liquidity pools and earn interest or use their assets as collateral to borrow funds. This permissionless model allows individuals who lack access to traditional banking services to participate in lending and borrowing activities, expanding financial inclusion. Real-World Examples of Financial Inclusion Through Decentralization Financial inclusion is not only a matter of individual empowerment but also a driver of economic growth. By providing access to financial services, decentralized systems enable individuals to save, invest, and participate in economic activities. This participation leads to greater economic stability, increased entrepreneurial activity, and the reduction of poverty. For investors, the growth of decentralized financial networks presents unique opportunities to support projects that are driving financial inclusion and transforming traditional markets. The ability to invest in platforms that are building a more inclusive financial system is a compelling aspect of the digital asset space. Decentralization plays a crucial role in promoting financial inclusion by providing open, permissionless access to financial services. By eliminating intermediaries and reducing barriers, decentralized networks empower individuals to take control of their financial futures, participate in the global economy, and improve their quality of life. For Vikara and others in the digital asset space, understanding the impact of financial inclusion is key to recognizing the broader societal benefits of decentralized technologies. As we continue this series, we’ll explore more facets of decentralization, each contributing to a more inclusive, equitable, and dynamic future. To continue reading the report, please click below      GO BACK – 4. INNOVATION & GROWTH COMING SOON – 6. REDUCED SINGLE POINTS OF FAILURE Alex PriorVikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for.

The Importance of Decentralization – 4. Innovation and Growth

The Importance of Decentralization – 4. Innovation and Growth A series by Vikara. October 16, 2024 Innovation and Growth in Decentralized Ecosystems Innovation is the lifeblood of any thriving ecosystem, driving progress, creating new opportunities, and fostering economic growth. Traditional, centralized systems, however, often act as gatekeepers to innovation. They impose barriers to entry, limit access, and dictate the rules of engagement.  In contrast, decentralized ecosystems offer an open, permissionless environment where innovation can flourish. By removing intermediaries and empowering participants to build and collaborate without centralized control, decentralized systems unlock new avenues for creativity, experimentation, and growth. This chapter delves into how decentralization fosters innovation and growth, providing real-world examples that illustrate the transformative potential of open, decentralized ecosystems. The Innovation Bottleneck in Centralized Systems Centralized systems, by their nature, concentrate power and decision-making authority in the hands of a few. While this centralization can streamline processes and enforce standards, it also creates significant barriers to innovation: Gatekeeping and Control: Centralized platforms often act as gatekeepers, controlling who can participate and under what conditions. This control can stifle creativity and prevent new ideas from gaining traction. Limited Interoperability: Centralized systems are often siloed, with limited interoperability between platforms. This fragmentation makes it difficult for innovators to create solutions that work across different ecosystems. High Barriers to Entry: In many centralized industries, entering the market requires navigating complex regulations, acquiring licenses, or securing partnerships with established players. These barriers can be prohibitive for small-scale innovators and startups. A prime example of this bottleneck is the traditional financial system. Banks, payment processors, and other financial intermediaries often control access to the financial markets, creating barriers for new entrants. Innovators must navigate complex regulatory landscapes, acquire licenses, and partner with established institutions to bring new financial products and services to market. Decentralization: A Catalyst for Innovation and Growth Decentralized ecosystems remove these barriers by providing an open, permissionless environment where anyone can participate, build, and innovate. This openness fosters a culture of experimentation and collaboration, leading to rapid advancements and the emergence of new business models. Here’s how decentralization drives innovation and growth: Permissionless Innovation:  In decentralized ecosystems, anyone can build and deploy applications without seeking permission from a central authority. This freedom encourages a diverse range of participants to contribute ideas, leading to a more vibrant and innovative ecosystem. Example: Ethereum’s blockchain has become a hub of innovation due to its permissionless nature. Developers can create and deploy smart contracts and decentralized applications (dApps) without requiring approval from a central entity. This open environment has led to the rapid growth of sectors like decentralized finance (DeFi), with platforms such as Aave, Compound, and Uniswap emerging as leaders in this space. Interoperability and Collaboration:  Decentralized systems are often designed to be interoperable, enabling seamless interaction between different networks and platforms. This interoperability facilitates collaboration, allowing developers to build on existing protocols and create new solutions that work across multiple ecosystems. Example: Polkadot is a decentralized network that facilitates interoperability between different blockchains. It enables developers to create cross-chain applications, fostering collaboration and innovation across various blockchain ecosystems. Projects building on Polkadot can leverage the network’s shared security and interoperability to create more robust and versatile solutions. Lower Barriers to Entry:  Decentralization reduces the barriers to entry by removing the need for intermediaries and simplifying the process of launching new projects. This inclusivity enables a broader range of participants, from individual developers to small startups, to innovate and bring new ideas to market. Example: Decentralized crowdfunding platforms like Gitcoin enable developers to raise funds for open-source projects without relying on traditional venture capital or centralized funding sources. By lowering the barriers to entry, these platforms empower developers to pursue innovative ideas that may not fit within the constraints of traditional funding models. Real-World Examples of Innovation in Decentralized Ecosystems Innovation in decentralized ecosystems is not just about creating new technologies; it’s about redefining how we interact with digital services, assets, and each other. By fostering an open environment where anyone can participate, decentralization drives the development of solutions that address real-world problems, from financial inclusion to data privacy. For investors, the rapid pace of innovation in decentralized ecosystems presents unique opportunities. The ability to invest in projects that are pioneering new business models, disrupting traditional industries, and creating new markets is a key factor driving the growth of the digital asset space. Decentralization serves as a catalyst for innovation and growth by providing an open, permissionless environment where creativity and experimentation can thrive. By removing barriers and enabling collaboration across ecosystems, decentralized systems are reshaping industries, fostering new business models, and driving economic growth. For Vikara and others in the digital asset space, understanding the innovative potential of decentralized ecosystems is crucial to recognizing the transformative power of these technologies. As we continue this series, we will explore more ways in which decentralization is paving the way for a more inclusive, resilient, and dynamic future.. To continue reading the report, please click below      GO BACK – 3. USER EMPOWERMENT READ NEXT CHAPTER – 5. FINANCIAL INCLUSION Alex PriorVikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First to KnowKeep up to date with industry news and events ©

The Importance of Decentralization – 3. User Empowerment

The Importance of Decentralization – 3. User Empowerment A series by Vikara. October 14, 2024 Empowering Users Through Decentralization Centralized systems have long controlled the flow of information, financial assets, and digital interactions. While these systems provide convenience and efficiency, they often do so at the cost of user autonomy. In centralized models, users must trust third parties to manage their data, control their assets, and even dictate the terms of their participation in various ecosystems. This reliance on intermediaries can lead to restricted access, censorship, and a loss of individual control. Decentralization shifts this dynamic by empowering users. In decentralized systems, individuals have direct control over their assets, data, and participation. By removing intermediaries and placing control in the hands of users, decentralization enables a more equitable and user-centric digital landscape. This chapter explores how decentralization empowers users, providing real-world examples to illustrate this transformative shift. The Limitations of Centralized Control Centralized systems, whether in finance, social media, or digital services, typically require users to surrender control to a central authority. This surrender comes with several limitations: Restricted Access: Centralized platforms can limit who can access services, often based on geographical, financial, or regulatory criteria. This exclusion can prevent individuals from participating in certain markets or services. Censorship and Control: Central authorities have the power to censor content, freeze assets, or block transactions. This control can limit free expression and the ability to use one’s assets freely. Data Ownership: In centralized systems, user data is often owned and controlled by the platform. Users have little say in how their data is used, shared, or monetized, leading to privacy concerns and potential exploitation. A notable example of centralized control is social media platforms. Companies like Facebook and Twitter control the flow of information, deciding what content is allowed and who can participate. Users’ data is stored on centralized servers, often used for targeted advertising or sold to third parties without direct consent. This centralized control can lead to censorship, data breaches, and a lack of transparency.. Decentralization: Returning Control to Users Decentralized systems address these limitations by placing control directly into the hands of users. This empowerment manifests in several ways:: Ownership and Control of Assets:  In decentralized financial systems (DeFi), users retain full control over their assets without the need for intermediaries like banks. They can manage, transfer, and trade assets directly from their digital wallets, bypassing the need for central authorities. Example: Uniswap, a decentralized exchange (DEX), allows users to trade cryptocurrencies directly from their wallets without relying on a centralized entity. Users maintain control over their funds throughout the process, reducing the risk of losing assets to hacks or platform failures commonly associated with centralized exchanges Data Sovereignty:  Decentralized networks provide users with control over their personal data. Unlike centralized platforms that store data on central servers, decentralized systems enable data to be stored and managed by the users themselves. This ensures privacy and prevents unauthorized access or misuse. Example: The decentralized social network Mastodon operates on a federated model, where users can choose servers to host their data. This contrasts with centralized social media platforms, giving users more control over their personal information and reducing the risks associated with centralized data breaches Participation and Governance:  In decentralized ecosystems, users often have a say in the network’s governance. This democratic participation ensures that changes to the system are made transparently and with the consensus of the community, rather than being dictated by a central authority. Example: Decentralized Autonomous Organizations (DAOs) like Aragon enable users to participate in decision-making processes. Members can propose, vote on, and implement changes within the organization, ensuring that the network evolves according to the collective will of its participants Real-World Examples of User Empowerment in Decentralized Systems User empowerment is more than just a technical feature; it’s a fundamental shift in how digital systems operate. By giving users control over their assets, data, and participation, decentralization fosters a more inclusive, equitable digital ecosystem. For investors, understanding this empowerment is crucial to recognizing the value that decentralized systems bring to the table. In the digital asset space, user empowerment translates to greater financial autonomy, privacy, and participation. It enables users to take control of their financial futures, interact with global markets without intermediaries, and engage in governance processes that shape the evolution of decentralized networks. Decentralization empowers users by returning control over assets, data, and participation back to individuals. This empowerment stands in stark contrast to the centralized systems that dominate many aspects of our digital lives today. By removing intermediaries and fostering direct interaction, decentralized systems create a more user-centric digital landscape. For Vikara and others in the digital asset space, recognizing the power of user empowerment is key to understanding the transformative potential of decentralized technologies. As we continue this series, we’ll explore more facets of decentralization, each contributing to a future where users, rather than central authorities, hold the power. To continue reading the report, please click below      GO BACK – 2. TRANSPARENCY & TRUST READ NEXT CHAPTER – 4. INNOVATION & GROWTH Alex PriorVikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First to KnowKeep up to date with industry news and events ©

The Importance of Decentralization – 2. Transparency & Trust

The Importance of Decentralization – 2. Transparency & Trust A series by Vikara. October 10, 2024 Transparency and Trust in Decentralized Systems In an era where data manipulation, opaque practices, and centralized control have eroded public trust, transparency has become a vital attribute for any system aspiring to be fair, equitable, and trustworthy.  Centralized systems, with their closed and often opaque operational models, have repeatedly shown vulnerabilities to corruption, mismanagement, and exploitation. In contrast, decentralized systems are designed to be transparent by nature, creating an environment where trust is embedded in the very architecture of the network. Transparency is one of the foundational promises of blockchain and decentralized technologies. It enables participants to have a clear, unobstructed view of the system’s operations, fostering trust among users and reducing the likelihood of manipulation. This chapter explores how transparency is achieved in decentralized systems and why this transparency is crucial for building trust in digital ecosystems.. Centralized Systems: The Opacity Problem In centralized systems, a single entity or a small group holds control over data and decision-making processes. While this centralization can lead to efficiency and streamlined decision-making, it also brings significant drawbacks: Lack of Accountability: Centralized authorities operate behind closed doors, with limited oversight from external parties. This lack of accountability can lead to unethical practices, data manipulation, and misuse of power. Data Manipulation: In centralized networks, data can be altered, hidden, or manipulated by those who control the system. Users have no way to independently verify the integrity of the information they are provided. Erosion of Trust: When users cannot verify the operations of a system, trust becomes a fragile commodity. Scandals involving financial institutions, governments, and corporations have demonstrated how opaque systems can lead to widespread mistrust.  A notable example is the 2008 financial crisis, where the lack of transparency in financial institutions and their dealings in mortgage-backed securities led to a global economic collapse. The opaque nature of these institutions prevented the market from understanding the risks involved, resulting in a catastrophic loss of trust in the financial system. Decentralization: Embedding Transparency into the System Decentralized systems offer a different approach, where transparency is built into the network’s core architecture. Here’s how decentralization enhances transparency and trust: Open Ledger and Public Auditing:  In decentralized networks, like blockchains, all transactions are recorded on a public ledger that is visible to everyone. This open ledger allows anyone to audit the system, verify transactions, and ensure that the network operates as intended. Example: Bitcoin’s blockchain provides a transparent ledger where every transaction since its inception is recorded. Anyone can access this ledger, verify transactions, and track the movement of assets. This level of transparency has fostered a sense of trust among Bitcoin users, as they know that no single entity can alter the transaction history Immutable Records:  The transparency of decentralized systems is further enhanced by their immutability. Once data is recorded on the blockchain, it cannot be altered or deleted without the consensus of the network. This immutability ensures that the records remain accurate and trustworthy over time. Example: Ethereum’s blockchain not only records transactions but also stores smart contracts. These contracts, once deployed, cannot be changed, providing a transparent and immutable record of agreements and interactions on the network. This transparency is crucial for applications like decentralized finance (DeFi), where users need to trust that the contract will execute exactly as coded Community Governance and Participation:  Decentralized networks often employ community governance models, where stakeholders have a say in the network’s operations and decision-making processes. This democratized approach to governance ensures that decisions are made transparently and with the input of the community. Example: Decentralized Autonomous Organizations (DAOs) like MakerDAO operate with a governance model where MKR token holders can propose and vote on changes to the protocol. This process is entirely transparent, with voting results and discussions made publicly available, fostering a sense of community trust and ownership Real-World Examples of Transparency in Decentralized Systems Transparency is not just a technical feature; it’s a fundamental component that builds trust in digital systems. For investors, the ability to audit and verify the operations of a decentralized network provides confidence that the system is secure and operates fairly. For users, transparency ensures that their interactions are governed by open and immutable rules, reducing the risk of manipulation or fraud.   In the context of digital assets, transparency also allows for more informed decision-making. Investors can analyze on-chain data, assess the health of a network, and make investment decisions based on verifiable information rather than relying on opaque reports or third-party assurances.   Transparency is a cornerstone of decentralized systems, setting them apart from traditional, centralized models. By providing an open ledger, immutable records, and community-driven governance, decentralized networks foster an environment where trust is not dependent on a single authority but is embedded within the system itself.   For Vikara and others in the digital asset space, understanding the value of transparency in decentralized networks is key to recognizing the transformative potential of these technologies. As we continue through this series, we will explore more ways in which decentralization is reshaping our world, making it more open, secure, and equitable.. To continue reading the report, please click below      GO BACK – 1. RESILIENCE & SECURITY READ NEXT CHAPTER – 3. USER EMPOWERMENT Alex PriorVikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First

Trump vs Harris – REVISITED!

Trump vs Harris Who’s Better for Crypto? Does it really matter? September 26, 2024 UPDATE: 29th October 2024 Given the US Presidential Elections are only a week away and following the past three elections, crypto has done very well, we want to revisit how each candidate may affect the crypto industry. When we released our Trump vs Harris piece a month ago, the odds where in Harris’ favor, both in terms of polling and gambling markets. Both have moved in Trump’s favor, with gambling markets predicting an overwhelming Trump victory (Figure 1), while polling is showing Trump winning the Electoral College 312-226 (Figure 2). Figure 1 – Polymarket (LHS) and PredicIt (RHS) Betting Market Odds Source: Polymarket & PredicitIt Figure 2 – Real Clear Polling National Average Polls (October 29, 2024) Source: Real Clear Polling While many view risk assets and namely crypto as a “Trump trade”, we continue to be of the view that the pendulum has swung in favor the crypto industry such that the hostile approach by regulators and most politicians is largely over. Further, while the fact is that Republicans have been far more supportive of the crypto industry than Democrats, the latter has begun to embrace the sector as it has gained influence, especially amongst younger voters, therefore it’s not so much a Trump v Harris debate, but a when does the fiscal irresponsibility end debate, which many, including us, believe is never. Please see the original post below, published on 26 September 2024 We have recently had several LPs ask for our views on how each US presidential candidate’s proposed policies will affect the cryptocurrency (“crypto”) market. While we have focused specifically on what each candidate and party has said and done to date, we note that cryptocurrency prices are also influenced by economic policies where they respond positively to lower interest rates and increased liquidity, which both are moving in the right direction for risk assets. Hence, we will avoid the economic policy portion of the debate while noting that neither candidate seems to want to move towards fiscal responsibility. Further, while this note may come across as partisan in favor of Republicans, this is not our intention. The fact is Republicans have been far more supportive of the crypto industry than Democrats. That said, Democrats as a party have begun to embrace the sector as it has gained influence, especially amongst younger voters. Donald Trump Donald Trump is the first President or Presidential candidate to fully embrace crypto. His open support started in May of this year when he was asked by crypto-influencer Malcolm DeGods his views on crypto during a press conference at Mar-a-Lago. Trump acknowledged that the US government has been hostile towards the industry, pushing businesses overseas and would look to embrace and encourage crypto businesses to build and grow in the USA. Trump then immediately doubled and tripled down, first sending a note on Truth Social that he’s “positive” and “open-minded” to “all things in this burgeoning industry” (Figure 1). Figure 1 – Trump statement on Truth Social supporting crypto Source: Truthsocial Then while speaking at the Libertarian National Convention, he stated “I will support the right to self-custody” meaning the ability to personally hold crypto outside a centralized entity. Figure 2 – Trump speaking at Libertarian National Party Convention Source: x.com Since then, he has continued to court crypto special interest voters by speaking at the world’s largest gathering of Bitcoiners, The Bitcoin Conference (aka Bitcoin Nashville) in July, for example. There he stated that he would make the United States the “crypto capital of the planet” and create a bitcoin “strategic reserve” using the Bitcoin that the government currently holds. He also declared his intention to establish a new presidential advisory council focused on Bitcoin and cryptocurrency regulation, nominate a crypto-friendly Securities Exchange Commission (SEC) chair and block the Federal Reserve (Fed) from creating its own central bank digital currency (CBDC). He also stated at an early September speech at the Economic Club of New York that “instead of attacking industries of the future, we will embrace them, including making America the world capital for crypto and Bitcoin.” More recently, he has made multiple suggestions that the US could pay off the US federal debt of $35 trillion with crypto, which is clearly not practical or even possible. But it’s election season. In terms of the likely executive branch and advisors, Trump has and will likely surround himself with a pro-crypto team. JD Vance, who previously disclosed a sizable Bitcoin holding, has long held a positive stance on crypto, likely shaped by his time working with Peter Theil. Vivek Ramaswamy, who has endorsed Trump and who will likely be part of his team if he wins, has also long been pro-crypto and stated during the Republican Party primary debates that “my view is that most forms of cryptocurrency should be in the category of commodities, not securities”, a positive for the space. While Trump has not released any specific crypto policy papers, he has made numerous supportive policy statements including: Creation of BTC strategic reserve Establish a presidential advisory council focused on Bitcoin and cryptocurrency regulation Support the right to self-custody Nominate a crypto-friendly SEC chair Block the Federal Reserve from creating its own central bank digital currency (CBDC) Overall, Donald Trump has embraced crypto. Whether it’s because he’s a believer (he previously launched his own NFTs and decentralized finance (DeFi) project), it’s financially driven (he accepts donations in many different cryptocurrencies on his website) or it’s to court a decent size, younger voting bloc, it’s working to move the overall political narrative to a supportive industry position while gaining support from industry participants. Republican Party The Republican Party has been significantly more supportive of the crypto industry than Democrats. Three of the most vocal Congressman in supportive of the industry have been Patrick McHenry (R-NC), Tom Emmer (R-MN) and Mike Flood (R-NE). Examples of their pro-industry stance include Republican-led House passage in May 2024

The Importance of Decentralization – 1. Resilience & Security

The Importance of Decentralization – Resilience & Security A series by Vikara. September 24, 2024 Resilience and Security – Decentralization’s Core Strengths In a world where digital systems are becoming more integral to our daily lives, the ability to ensure resilience and security is paramount. Centralized systems, where control is concentrated in a single authority or server, are particularly vulnerable to hacking, system failures, and censorship. When these systems fail, the consequences can be devastating, as we’ve seen with countless high-profile breaches and outages in finance, social media, and infrastructure. Decentralization, on the other hand, introduces a paradigm shift by distributing control and responsibility across a network of participants. By removing the single point of failure and allowing multiple actors to validate and secure the network, decentralized systems significantly enhance both resilience and security. The Problem with Centralized Systems Centralized systems operate under a simple premise: a central authority controls the data, operations, and security of the network. This makes them efficient in decision-making but leaves them vulnerable in several ways: Single Point of Failure: If the central authority is compromised, the entire system could collapse. This could occur due to hacking, technical failures, or even deliberate sabotage. Limited Scalability: As a centralized system grows, it becomes increasingly difficult for the single authority to manage traffic, data, and security efficiently. Censorship and Manipulation: Centralized entities often have the power to control or manipulate the flow of information and transactions. This can lead to a lack of trust and transparency. An example of this vulnerability can be seen in major financial institutions. In 2017, Equifax, a centralized credit reporting agency, experienced a massive data breach that exposed the personal information of 147 million people. The breach occurred because hackers were able to exploit vulnerabilities in Equifax’s centralized system, highlighting the dangers of relying on a single point of control. Decentralization: Building Resilience and Security Decentralized systems, powered by blockchain technology, mitigate these risks by distributing control across many nodes. Each node in the network works together to validate and secure transactions, ensuring that no single entity has complete control over the system. This approach offers several key benefits: No Single Point of Failure:  In a decentralized network, even if one node or participant is compromised, the system can continue operating without disruption. The network’s distributed nature ensures that the failure of one component does not affect the overall integrity of the system. Example: Bitcoin’s blockchain is a decentralized network of thousands of nodes that validate and record transactions. Even if one node were to fail or be compromised, the remaining nodes would continue to maintain the integrity of the ledger. This has made Bitcoin one of the most secure digital systems in existence, with no successful hacks against the network itself since its inception. Enhanced Security Through Consensus Mechanisms: Decentralized networks use consensus mechanisms, such as Proof of Work (PoW) or Proof of Stake (PoS), to ensure that transactions are verified in a fair and transparent manner. These mechanisms prevent any single actor from gaining undue control over the network, as they would need to control the majority of nodes to manipulate the system. Example: Ethereum’s recent shift from PoW to PoS aims to improve both security and energy efficiency. In PoS, validators are required to stake their own assets as collateral, which incentivizes honest behavior. If a validator attempts to manipulate the system, they risk losing their staked assets, further protecting the network from attacks. Increased Trust and Transparency: Since decentralized systems operate on open-source protocols, anyone can audit the network’s operations and verify the integrity of transactions. This transparency builds trust among users, as they can be confident that no hidden manipulation is taking place behind the scenes. Example: Decentralized finance (DeFi) platforms like Aave and Uniswap operate with full transparency. Users can see the code, verify transactions, and trust that their assets are being managed fairly without a centralized entity controlling the flow of funds. Real-World Examples of Decentralized Resilience As we’ve seen, decentralized systems offer significant advantages in terms of resilience and security. By distributing control across a network of participants, these systems eliminate the single points of failure that plague centralized models. With blockchain technology at their core, decentralized networks provide enhanced security through consensus mechanisms and offer transparency that fosters trust among users. For investors and innovators alike, understanding the security benefits of decentralization is key to recognizing the potential of blockchain-based solutions. As we continue this series, we’ll explore more reasons why decentralization is driving the future of digital assets and reshaping the way we think about technology, governance, and finance. To continue reading the report, please click below      GO BACK – INTRO READ NEXT CHAPTER – 2. TRANSPARENCY & TRUST Alex Prior Vikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First to KnowKeep up to date with industry news and events   ©

The Importance of Decentralization – Intro

The Importance of Decentralization – Intro A series by Vikara. September 24, 2024 The Importance of Decentralization: Unlocking the Future of Blockchain and Digital Assets The Importance of Decentralization: Unlocking the Future of Blockchain and Digital Assets In the digital age, the way we interact with data, finance, and even social platforms is evolving rapidly. Centralized systems have long been the backbone of the internet and traditional finance, but they come with limitations: vulnerability to failure, manipulation, and monopolization of power. In contrast, decentralization, a core feature of blockchain technology, is emerging as a transformative force capable of reshaping industries, improving transparency, security, and efficiency. This series will explore 20 distinct reasons why decentralization is not only important but essential for the future of technology, finance, and digital ecosystems. It will delve into how decentralized systems are bringing about a paradigm shift, empowering users, and enabling innovation in ways that centralized models simply cannot. Blockchain: The Foundation of Decentralization At the heart of decentralization is blockchain technology. Blockchains are distributed ledgers that operate without a central authority, making them more secure, transparent, and resilient. Unlike traditional databases, which are controlled by a single entity, blockchains are maintained by a network of participants who validate transactions and ensure the integrity of the system. This decentralized approach reduces the risk of fraud, manipulation, and censorship, fostering an environment of trust and accountability. Decentralization also aligns with the broader promise of what cryptocurrency can achieve — unlocking new possibilities in financial inclusion, peer-to-peer interactions, and governance models. From decentralized finance (DeFi) platforms to decentralized social media, the applications of blockchain are vast, offering solutions to problems that have long plagued centralized systems. Why Decentralization Matters Resilience and Security: One of the most significant advantages of decentralized systems is their ability to withstand attacks and failures. In centralized systems, a single point of failure can bring down entire networks, whereas decentralized networks distribute the risk, making them inherently more resilient. This is especially important in the context of financial systems, where trust and stability are paramount. Transparency and Trust: Decentralization enables a level of transparency that is difficult to achieve in centralized systems. By operating on open, public blockchains, decentralized systems allow anyone to audit transactions and verify the integrity of the network. This transparency builds trust among participants and fosters an environment of accountability. Empowering Users: In decentralized networks, power is distributed among participants, rather than concentrated in the hands of a few. This empowerment enables users to have greater control over their data, assets, and interactions. It shifts the balance of power away from centralized institutions and towards individuals and communities. Innovation and Growth: Decentralized ecosystems foster innovation by allowing developers and entrepreneurs to build on open protocols without needing permission from a central authority. This permissionless innovation has already led to the creation of groundbreaking technologies, from DeFi protocols to decentralized autonomous organizations (DAOs). The Future of Decentralized Business Models Vikara believes in the transformative potential of decentralized business models. As an investment firm focused on the digital asset space, Vikara sees decentralization as a key driver of long-term value creation. Decentralized systems offer unique investment opportunities that go beyond speculative gains. They represent a fundamental shift in how businesses are structured and how value is created and distributed. For Vikara, decentralization is not just a trend; it’s the future. From DeFi protocols that democratize access to financial services, to decentralized governance models that enable community-led decision-making, the opportunities are vast. These models reduce the reliance on intermediaries, improve operational efficiency, and unlock new revenue streams for investors and innovators alike. Decentralized networks have the potential to disrupt industries from finance to healthcare, providing new avenues for growth, innovation, and inclusivity. Vikara seeks to invest in projects that are pioneering these decentralized models, contributing to a more open, secure, and efficient global economy. As we dive into this series, each section will examine one of the 20 key reasons why decentralization is not just important but inevitable. From financial inclusion to greater security, from innovation to transparency, decentralization is driving the future of digital ecosystems. This series aims to educate and inform those who are new to blockchain and digital assets, while highlighting why Vikara believes in the power of decentralization as a strong investment opportunity. Join us as we explore how decentralization is transforming industries, empowering users, and creating a more resilient and innovative future. To continue reading the report, please click below      READ NEXT CHAPTER – 1. RESILIENCE & SECURITY Alex Prior Vikara Capital ABOUT VIKARA Vikara is an open-ended fund, with investors able to add or redeem monthly. Please contact usif you would like to discuss anything further. Vikara, in Sanskrit, describes the process of change. Its definition is constantly evolving, changing with economic cycles, technology, and geopolitics. It is a transformation of thought or logic, a modification in the direction of travel, an alteration in action or participation. It is one thing to want change, but another to drive it. We believe in a world where commerce doesn’t need intermediaries. Where people are paid directly for content, time, and effort. Where privacy, data and free speech is given, not something to opt-in for. Be the First to KnowKeep up to date with industry news and events   ©